Russia's Sistema heading to emerging markets

By

Cassidy Mantor

Published
Jan 27, 2016

Russian telecom giant AFK Sistema announced it will partner with India-based Tata Group, and also the Russian-Chinese Investment Fund (RCIF) to bring two of their apparel labels to emerging markets.

Sistema and Tata will together bring mass-market retailer Concept Group. Sistema will bring over Children’s World (Detsky Mir) with RCIF. Concept Group produces lines including Bestia, Infinity Lingerie, and Concept Club. Sistema owns 40% interest in Concept Group.

Sistema’s principal owner Vladimir Yevtushenkov said to RBTH.com’s Russia & India Report, “This is a completely different market, with different volumes and other demands. If it all works out well, this will be a huge success for us. If things do not work out, we are not risking much, and we will simply need to reformat, and start thinking of what to do next.”

Sistema needs to globally expand the Children’s World chain, as it is nearing the maximum number of stores domestically allowed before it will violate Russian antitrust laws.

In a press release earlier this month announcing the sale of 23% stake of Children’s World to RCIF, Kirill Dmitriev, CEO of RDIF and co-CEO of RCIF, said, “Detsky Mir is building an amazing success story in children goods retail in Russia and the CIS. Partnership with Sistema and Detsky Mir offers a great experience for RCIF, and we are glad to take our relationship with them to the next level and to support Detsky Mir’s development and expansion to international markets.”

Sistema plans to start selling the apparel lines in India, then China, and continue expanding globally from there.

“Expansion is not possible without partners, even if these are mere investors,” said Yevtushenkov in the Russia & India Report. “We did not make this sale because the Children’s World needed the money. The chain is doing well, and has sufficient financial resources of its own,” he said.